Australia's shale gas boom a way off: study

A study shows that Australia is sitting on vast resources of shale gas, but better regulation and lower infrastructure costs will be needed to develop a large-scale industry.

Shale gas is a form of natural gas that exists further below the surface than coal seam gas. It usually requires hydraulic fracturing of rock layers to extract it, a process known as fracking.

Dr Peter Cook, from the Australian Council of Learned Academies, says the council's report, the first comprehensive study of its kind, shows an industry must still overcome many hurdles.

"Whilst the title is 'Goldmine or environmental disaster?', it's not going to be either of those things.

"It will require great skill, persistence, capital, careful management of any impacts and transparent and effective regulation.

"Provided we have all these things in place and the right rocks, shale gas could be an important new energy option for Australia."

Natural gas currently provides 21 per cent of the world's energy supplies.

Dr Vaughan Beck, from the Australian Academy of Technological Sciences and Engineering says it's the discovery of new unconventional gas resources that are transforming energy markets across the world, most notably in the United States.

"Some five or six years ago, there was about 50 to 60 years worth of gas supply globally, but now it's believed there's at least 200 years of supply arising from discoveries of unconventional gas.

"Just around about the turn of the millennium, the US conventional gas fields were in decline, but now, shale gas represents about one third of their gas supplies.

"That's expected to be about half by 2035."

The Australian industry is still in its infancy, with just one commercial shale gas well in Australia, in the Mumbo Gas Field in South Australia.

Dr Beck says the Australian industry faces significantly higher capital costs that could limit a large-scale shale gas industry compared to the United States.

"The cost of drilling in Australia is expected to be three to four times the cost of drilling in the United States," he said.

"There's something like 2,000 drilling rigs that are operating, while in Australia there's just a handful.

"So there are expected to be quite substantial cost penalties associated with development of shale gas compared to the United States where there's been a very very rapid rise."

Dr John Williams, former commissioner of the NSW Natural Resources Commission, says effective management of environmental risks will also be essential for the development of a shale gas industry in Australia, which could mean reviewing how projects are currently approved.

"The current practice of approval project by project, can lead to death by 1,000 cuts.

"We need to get much better at looking at aggregated and cumulative environmental effects on the disturbance of the landscape."

The University of Queensland's Professor David Bremerton says building public confidence is also necessary to develop support for larger-scale shale gas projects.

"Where you don't have that broader social licence it's harder to get regulatory approval.

"You're more likely to see restrictions on land access, we've already seen that in NSW and Queensland around the quarantining of quite large areas of agricultural land from various forms of resource development.

"Critical to any social licence is being able to demonstrate in a way that withstands scrutiny and it accepted by other that has extraction can be undertaken without causing any long-term environmental harm.

"If you plan for these things it makes it more likely to maintain local support."

And Dr Vaughan Beck says getting these things right could be worth it.

The report also indicates there could be significant reductions in greenhouse gas emissions if Australia moved towards a gas-driven energy sector.

"Whilst there are substantial emissions associated with the production of shale gas, it could be just 50 or 75 per cent of the emissions of black coal.

"So there are potentially very significant reductions in total greenhouse gases if gas was to replace coal."